2025
Global Power Transmission Report
Regional Market Overviews
Canada
GDP (Current Prices) USD (2023) | 2,142 Bn |
Projected Average GDP Growth (2024-2028) | 1.9% |
10-year Govt Bond Yield (12-month rolling average) | 3.4% |
Country Credit Rating | AAA |
Renewable Energy Share | 9% |
Total Transmission Line Length (Km) | 166,000 |
Transmission Network
Canada’s power transmission is managed by publicly and privately owned utilities (Canada West Foundation, 2023). Apart from Alberta, most provinces have vertically integrated utilities overseeing transmission grids and generation (Canada West Foundation, 2023). In Alberta, unbundled utilities handle transmission and distribution, while generation is through a competitive, energy-only market. In terms of total network line length capacity, five utilities account for almost two-thirds of the total installed line length capacity.
The Canadian power system’s cross-border trade is entirely with the US and maintains a net export balance. The power trade, with 1,522 km of cross-border transmission line length, is predominantly led by hydropower generation in the Canadian provinces of Quebec, Ontario, Manitoba and British Columbia. Dependence on hydropower is also subject to fluctuations, as observed in the 46% fall in net exports in 2023 due to abnormally dry weather (CER, 2024).
Utilities are gradually overhauling ageing network assets as a major focus. Over the years, most have made minimal investments in expanding or reinforcing the grid. The resulting constraints are much more pronounced in a scenario of changing energy mix and rising power demand. Interregional links, for instance, are grossly inadequate. This prevents any economical utilisation of surplus generation and transfer of resources for grid management and emission levels.
Cross-border Transmission Linkages
| Country Linkage | TSO / Owner | About the Linkage |
|---|---|---|
| Canada (Quebec) – US (New England) | Hydro Québec National Grid USA | 1480 km long, ±450kV HVDC line with 2,000MW capacity in operation since 1986. |
| Canada (Quebec) – US (New York) | Hydro Québec | Enables interconnection of the 735kV Canadian and 765kV New York grids with a transmission capacity of 1,500MW; operational since 1984. |
| Canada (Manitoba) – US (Minnesota) | Manitoba Hydro Minnesota Power | A 360km long 500kV AC transmission link capable of transferring up to 800 MW of electricity and has been operational since 2021. |
Drivers in Energy Transition
Canada’s long-term target of achieving net zero by 2050 involves a key milestone of decarbonising the power sector by 2035. The legal enforcement of the same is likely with the upcoming enactment of the Clean Energy Regulations (Government of Canada, 2024), making it much more credible vis-à-vis the targets determined by the government.
The Canadian power generation segment already enjoys a significantly decarbonised resource base. Over 70% of the total grid supply is based on hydropower and nuclear energy, the former being the largest resource so far. Together with renewable energy, the decarbonised supply’s share stands at 80%. With such a position in the energy mix, renewable power capacities have been late to catch up. An average of 2.4GW was added between 2021 and 2023 due to the prioritisation of renewable energy in the grid (IRENA, 2024). The momentum in renewable power capacity addition is poised to pick up as fossil fuels are phased out of the generation mix.
The trend shows a gradually rising share of gas-based power in the total grid power supply – from 10% in 2018 to 14% in 2023. About 3.5GW of new-build gas-based power capacity is in the pipeline for commissioning in 2024 (as of April 2024). Most of them are meant to replace the coal-fired power plants phased out from the grid. However, this is also an apparent contradiction to the regulatory framework seeking binding targets of decarbonisation. It remains to be seen how gas-based power is reconciled with the decarbonisation objectives.
Clean energy integration in the grid must be done in tandem with expansion to accommodate the upcoming rise in power demand. Besides the economy-wide shift towards electrification, a major segment is data centres planned in many provinces. System operators of the Quebec, Ontario and Alberta provinces have outlined a sharp rise in their power demand over the 7-10 years and are thus provisioning for the same. Notably, Canada’s high share of low-carbon grid power is a major draw for prospective data centre developers (S&P Global, 2024).
Policy Regulation
The Canada Energy Regulator oversees interprovincial and international pipelines and power lines. At the same time, provinces exercise substantial authority over energy matters within their borders, including the regulation of electricity production, generation, transmission, and distribution.
Various provincial regulatory authorities deliberate and approve the rates for the respective utilities, which operate as vertically integrated utilities. Lately, the authorised returns on equity have risen for many of the utilities, reflecting a recognition of the rise in the cost of capital for regulated utilities. It can be related to the rise in the country’s benchmark interest rates in the last two years.
In December 2021, the federal government introduced the Clean Electricity Regulations, targeting a reduction in greenhouse gas (GHG) emissions from fossil fuel-powered electricity by 2035. The draft regulations, published in August 2023, propose limiting carbon dioxide emissions from fossil fuel power plants to 30 tonnes of CO₂ per gigawatt-hour by 2035 (Norton Rose Fulbright, 2024). While the final version of the regulations has yet to be released, the proposal has faced criticism, particularly from provinces such as Alberta and Saskatchewan, which depend heavily on hydrocarbon-based electricity generation.
Recent Changes in the Authorised Returns for the Utilities
| Operating Utility | Deemed Equity Ratio | Authorized RoE | Recent Changes |
|---|---|---|---|
| Alberta Electric Utilities | 37.00% | 9.28% | RoE increased from 8.50%; new base RoE is 9.00%; new formula implemented |
| FortisBC Electric | 41.00% | 9.65% | RoE increased from 9.10%; equity ratio increased from 40% |
| Ontario Electric Utilities | 40.00% | 9.21% | RoE decreased from 9.36% under formula |
| Maritime Electric | 40.00% | 9.35% | Raised cap on earnings to 9.70% |
| Newfoundland Power | 45.00% | 8.50% | Pending |
| Nova Scotia Power | 40.00% | 9.00% | Equity ratio increased from 37.5% due to energy transition risk |
Source: Concentric Energy Advisors
Market Opportunity
Power transmission projects can get funding support under policy schemes covering a wide range of investments towards decarbonisation and net zero. Lately, the federal budgetary allocations have prioritised grid reinforcement and expansion. In October 2024, the government announced added support worth C$500 million for the Smart Renewable and Electrification Pathways Program (SREPs) Utility Support Stream. The Federal Budget of 2023 recapitalised the SREPs with an allocation of about $2.9 billion to cover renewable energy technologies, energy storage and grid modernisation. The additional outlay augmented the $1.5 billion allocated in the Budgets of 2021 and 2022. With this announcement, the Federal government also launched the request for expressions of interest for the Utility Support Stream for the utilities, system operators, and industry organisations. The projects funded in this context would include investment proposals aimed at the reliability, resilience, and flexibility of the power system (Government of Canada, 2024).
The policy support also extends to tax incentives, as laid down in the Federal Budget 2024. The Clean Technology Investment Tax Credit (ITC) is a refundable tax credit for the capital invested in the adoption of new clean energy technology property in Canada from March 28, 2023, to December 31, 2034 (Government of Canada, 2024). For transmission projects between Canadian provinces and territories, the applicable ITC is up to 15% (KPMG, 2024).
The investment funding support is timely because the transmission network requires significant expansion, reinforcement, or replacement to prepare the power system for emerging requirements. Many of the provincial transmission utilities have planned major projects in this regard. Many of the investment plans are also driven by the rising need to build resilience against extreme weather. Also, the legacy grid management practices, borne out of years of depending on fossil and hydropower, are
HVDC transmission systems constitute an important aspect of the planned network investments. Reflecting this, in July 2024, the government extended funding support of $30 million for an HVDC test and simulation facility. This will help Hitachi Energy’s power transformer facility in Quebec and enable a new one for HVDC simulation in Montreal. The equipment manufacturing and testing facility could potentially help the material supply chain against a backdrop of global challenges in sourcing power transformers (Recharge, 2024).
Planned Investments by Provincial Transmission Utilities
| Province | Transmission Utility | Investment Particulars |
|---|---|---|
| Ontario | Hydro One | Between 2024 and 2027, a total of $7.1 billion in investment commitment, based on regular approval (Hydro One, 2024) |
| British Columbia | BC Hydro | The investment plan for the period 2024-2034 is worth $36 billion in community and regional infrastructural projects, primarily in transmission (T&D World, 2024) |
| Quebec | Hydro-Québec | A $50 billion plan to install 5,000 km of line length by 2035. About half of the line length will be at high-voltage ratings of.735kV and 315kV (CBC, 2024) |
| Manitoba | Manitoba Hydro | Joint investment of about $500 million by the governments of Canada and Manitoba to strengthen Manitoba’s grid (T&D World, 2023). |
| Alberta | Alberta Electric System Operator | The 10-year investment plan for 2022 includes major grid reinforcement projects for the upcoming generation (AESO, 2022). |
| Saskatchewan | SaskPower | The utility announced $1.6 billion for the year 2024-25, of which $508 million was towards maintenance and upgrade of grid assets (SaskPower, 2024). |
Outlook
The policy goal of a net-zero power sector by 2035 requires re-aligning the power transmission sector for changes in the energy mix. Some of the pointers on the emerging outlook could be gleaned from the May 2024 report of the Canada Electricity Advisory Council (CAEC) – a government-convened autonomous body of power sector leaders representing all provinces (CAEC, 2024). It highlights, for instance, that the pressure of power sector decarbonisation might be on a few provinces, such as Alberta, Saskatchewan, Nova Scotia and remote communities of the North due to their dependence on fossil fuels. The power transmission system may thus have a vital role in mitigating such a skew.
Interregional transmission connectivity may be a major area of focus to enable decarbonisation in power generation across all provinces. So far, this has been a neglected segment of the network. As things stand, undertaking cross-border power transactions is easier and remunerative than inter-province power transfers – the volume of power flowing to the US is more than that between the Canadian jurisdictions. A timely capacity expansion in this regard could help address the anomaly.
A study done in 2022, modelling the capacity requirements for Canada’s net zero economy by 2050, projected about 6,000km of new or reinforced interregional transmission lines with power transfer capacity worth 29GW (David Suzuki Foundation, 2022). This amounts to an almost threefold rise in the interregional transmission network size. Such a scale of capacity would necessitate a decisive change in the policy and regulatory processes.
The federal government’s policies acknowledge the need to promote transmission. The recently introduced tax credit is important among the planned support measures for power transmission. However, there might be a case for reviewing it. The tax credits presently cover only inter-provincial transmission assets. The CAEC recommended that they should also be available for intra-provincial transmission projects due to their role in network strengthening and connectivity. Beyond incentives, there is an acute need to revisit the permitting processes to rationalise the lead times in building the new transmission assets. Notable among these are the norms which tend to overlap between Federal and provincial authorities.
The transmission utilities’ investment commitments point to the efforts underway. The requirements for net zero are tantamount to a complete transformation of the power system’s configuration. The challenge might lie in getting the system ready ahead of time to enable a smooth transition towards 100% decarbonised power generation.